The hoohah made around Bernard Arnault and Gérard Depardieu and the pigeons (the innovating wealth-creating job-creating thrusting young entrepreneurs who were going to get punitively soaked by the government's capital gains tax measures), and the tax exiles heading for Belgian border villages or for London, has occupied the French mainstream media for quite some time, and has fairly solidly established a narrative around French hatred of money-making (and how this explains "French decline").

The February number of Alternatives Economiques asks whether the wealthy in France are hard-done-by. Thierry Pech (article behind subs wall), takes a look at the 1% and concludes that they are doing comparatively as well as in the UK and better than in Germany:

Share of top 1% in total national income

As far as salaries go, Pech zooms in on the top 0.01% and cites research (pdf) showing changes in composition over the past three decades or so.

In 1976, 38% of the top 0.01% of salaries were in industry; 14% in 2007

1976, 8% from the financial sector; 24% in 2007

1976, 10% from services to enterprises; 26% in 2007

Salaries in this income group have of course hugely risen (and CEO pay is back to rising again after a halt due to the crisis: example, from 2010 to 2011, Maurice Lévy, CEO of Publicis, more than doubled his salary; as for Bernard Arnault, he voted himself a modest rise of only 11%). But salaries are only part of the story. Income from assets (2% to 3% of the total income of the bottom 90%) counts for half the total income of the top 0.01%. Asset wealth is in fact a feature of the French economy. According to Credit Suisse, 2.3 million French held assets of at least $1 million in 2012 (8% of the world total, placing France third behind the US and Japan). This works out at one dollar millionaire for 28 inhabitants, the highest density in the world. This is undeniably the result of the rise in French property values -- it remains to be seen what downward correction there might be (continuing rise in the Paris region, at least, and only moderate flattening in other regions...).

Are the wealthy creative entrepreneurs?

Few creators of innovative SMEs are in the upper income bracket, says Pech (though they may reach it by selling their business). Of the business owners or managers in the top 0.01%, most didn't found their enterprise. Of the 15 French billionaires in the Forbes Top 500 2012, 9 inherited their enterprise from their parents. These 60% have an average age of 72. In the world, only Germany has a higher percentage (65%) of inherited-wealth billionaires.

French wealth, as Pech says, looks more inherited and rentier than innovative entrepreneur. Not so many self-made men...

As for the claim that high incomes and wealth are punitively taxed, Pech points out that the trend (in France and elsewhere) has been towards reduction, not increase, and recent measures by the Fillon government first of all, then the current government, have done little more than halt the trend. Over the long term, and compared to other countries:

Income tax marginal rate, US, UK, Germany, France

No particularly French hate-on for the rich there. But an amazingly successful big whine in the media!

Well, one slight caveat on the last graph: this is about the highest tax bracket on net income.

But in the UK you apply that to gross income -so if you are earning mostly wages, there is a pretty big difference, namely the employee's salarial charges. On top of that, since the company's charges are significantly lower in the UK than in France, that makes it a much lower tax on what the company pays for the employee, which should probably be the real definition of a salary (the company pays more than the gross salary).

Of course, as mentioned, wages are only part of the story for the very rich, but things like that make comparisons between countries a little tricky.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

As always, cross-country comparisons are hard to establish. The chart, however, show that France shares in the 30-odd-year decline in higher income tax rates, which is one of the reasons why the rich have got richer -- in France as elsewhere.

Of course, what drives a handful of high-wealth French to Belgium is the soft regime on assets and successions. Bernard Arnault, it now transpires, had been preparing his exit to Belgium since 2005, and transferred his fortune last year before making the move public. His aim is to avoid inheritance tax.

But there are Belgians who prefer the sweet softness of the French income tax to the harshness of the Belgian:

"The Thalys works very well in both directions," quips the Belgian Marc Wauthoz, former central director of French bank Natixis. Since he has been living in Paris, has never paid so little tax. "For someone like me who lives off his work, the French tax system is very generous, even too much so. What between the family quotient, loopholes, deductions granted here and there, I'm in clover," he says enthusiastically. While some French emigrate to Belgium to escape wealth taxes, many Belgians have also settled in France to make the most of their salary. According to Joren Vandeweyer, deputy spokesman for Foreign Affairs of Belgium, more than 111,668 Belgians were living in France in 2012, and 106,594 in 2011. In the same year, there were 145,272 French in Belgium.

Pierre-François Coppens, tax advisor of the Institute of Chartered Accountants in Brussels, believes that Belgium inflicts on its citizens the heaviest tax on wages in the world after Sweden. Nevertheless, for the overall tax burden, France continues to break records, according to a study by Forbes in 2009. In this ranking, Belgium is not far behind, due to lower taxes on wealth. The absence of wealth tax, taxation of capital gains (other than shares, only recently taxed at 0.4%) but also the possibility to legally circumvent the inheritance tax rates, make Belgium a favourite destination for French large fortunes.

Belgian Stéphane Mortier compares his tax records: "In Paris, my income is taxed at 12%. Yet If I lived in Brussels, the rate would be around 40%." He left the Kingdom in 2004, "precisely for these reasons," he said.

Oh: differences of this nature and size between neighbouring countries that have been supposedly part of the same economic union for decades and part of a currency union for one decade, are quite simply unacceptable normal in any sane liberal view of the economy.

against it, in my view, looking at trends in growth and wealth generation.

You hit on one here with this post - inherited wealth, in large part Parisian and real-estate related.. I'd add two more - first, in incredibly insular worship of those who hold "elite diplomas" (check out the folks working for Jérôme in France, and compare to his cvs elsewhere. Symptomatic. Elite worship is not good for France, the "conventional "wisdom" penetrates far deeper into French society than, say, in America.

The third thing is over centralisation. I could go on about that, but it's probably a diary.

I hire engineers to do complex modeling and review of engineering projects. And it works. Our clients are usually happy. I think the team in Paris enjoys the work. They all pay high taxes (and most are happy to do so, believe it or not). They come from rather varied backgrounds. But yeah, let's make this about France and its flaws.

Hey, if it works for you, great, it's your firm. But clearly, we have a completely different idea of diversity. And, as you may know, or may not, one doesn't need an engineering degree from an elite french institution to create complex models.

The point on taxes is completely irrelevant. Do you mean the non-elites should be happy because y'all are paying high taxes to pay for their relative and varied levels of exclusion? That's very large of you.

And the larger point is that if this level of "diversity" is what one sees in a hiply-named and independent finance shop, it doesn't take much imagination to reckon the phenomena is far worse in more classic french enterprises.

No need to be polite, if a nerve has been touched I stand by my point, indeed I think you are helping me make it.

one doesn't need an engineering degree from an elite french institution to create complex models.

but one does it better and faster. You can - and we do - train people with other backgrounds to do it, but it takes a bit more time. You obviously have no idea what we do and what competences we need, but whatever.

And you have no idea about the diversity in the team anyway. I have no clue why you see me as the enemy (given how all your comments here about me are hostile), but I'm pretty sure it's not helping anybody.

This has been far from my experience, and yes I've worked with modellers from those schools you insist produce the skills you need (Mines in one case, Ponts et ChausséeS in the other, and the latter was nothing short of incompetent, but he was protected, thanks to his pedigree).

I think your opinion of this is very symptomatic of exactly what I am talking about. And personally, on my staff, I think I get a far better product when I have different skillsets, experience and backgrounds working together. Avoids groupthink and produces innovation. Doesn't always do so, but often enough to make it worth it, and it is also a far more equitable way, viz. Society in general, to promote inclusion.

Furthermore, you don't seem to have any worship of any degree, including yours, as evidenced by the fact that when I asked if I could do something for the team the answer was thanks but no as mine wasn't the right experience.

(for those who don't know, Jerome and I are fellow alumni)

(and still hoping that one day it might be the right experience for your then needs of course ;-) )

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

"the "conventional "wisdom" penetrates far deeper into French society than, say, in America."

Oh right, you mean all that diversity of opinion in the US about the financial system prior to the crash.

Then there's all the diversity of opinion about the post-crash possible recovery - ahem:

But in the main, professional economists have proven to be out of touch with the extent of the wounds left by the recession, which itself landed on top of a decade-long period of disappointingly lean growth and a quarter-century of stagnant wages for the majority of working people. Economists have proven particularly missing in action on the full-blown epidemic of joblessness and lost wealth that afflicts minority communities.

Over the past four decades - and more sharply over just the past few years - the geopolitical center of America has shifted rightward.
...

The move has been most pronounced on fiscal matters. In Washington today, when it comes to the size of government, the debate isn't over whether to cut spending, but by how much. It's not over how much to raise taxes to help alleviate a fiscal shortfall, but whether any kind of tax increase - even on the wealthiest few - is valid.

"I don't remember, ever, in my 45 years in this business, the debate in Washington being [almost solely], 'What are we going to cut?' " says Sal Russo, a top strategist for the Tea Party Express and a longtime Republican consultant who worked as an aide to Gov. Ronald Reagan and advised Hatch's 2000 presidential bid. "Washington is different than anything I've seen in 45 years."

Overall, these statistics are very depressing for those who subscribe to the notion that America is a meritocracy and a "land of opportunity." We see that there is far less social mobility in the United States than in other countries and other studies have shown clearly that this mobility is declining.

Many cite education as the key to socioeconomic mobility, and here the inequalities in the American educational system clearly play a role. ... When it comes to higher education, the amount of money your parents have is much more critical than academic potential, and higher education is a key to socioeconomic mobility.
...

Education makes a difference, as the facts make clear. Of the adults who grew up in low-income families but earned college degrees, only 16 percent stayed in the lowest income quintile. Of the adults who started in the lowest income quintile and failed to earn a college degree, 46 percent stayed there.

The bit I quoted made a very general claim about "conventional wisdom" in "French society"; hence my reply. If you wanted to make a very narrow claim about certain management levels you should have done so.

You say "btw I could make very similar comments about french elite opinion re: the crisis of the Euro" But you wren't saying France was similar to the US, you were saying that the US was superior, so your "btw" wouldn't justify the original, very general claim.

Personal experience is, of course, necessarily limited, and may be personally interpreted in particular ways due to a few negative experiences.

I think who gets into senior management levels is affected by the general social mobility in society and related access to higher education. So the points about the continued decline of social mobility in the US quoted above are relevant to the more limited claim you are now making.

I think I clearly was talking about the environment in corporate France, both in the post you responded to and in subsequent posts.

Social mobility is bad in the US, but it bad in France too. In the US, this is pretty much acknowledged and in fact you'll find people on the right defend it as a good thing. In France, it is pretty much not acknowedged, at least explicitly. Places where social mobility is good tend to be northern European countries, including Germany. Canada is good too. The UK is as bad as the US, France only slightly better than the US.

The mechanisms are different between the US and France. In the US, it's basically very much money related, ie direct. In France, where the elite tend to think of themselves as the product of an imaginary meritocracy, it is primarily enforced by what Cyrille refered to as "diploma worship". And, who get those diplomas? By and large, they are French, white and come from higher than average socio-economic strata. So while less directly money related, and therefore slightly less direct, you still end up with the same problem.

The French system has the further drawback, via "diploma worship" of de facto defavorising those who come from outside systems and therefore necessarily do not have the requisite diploma from one of top dozen or so engineering and business schools. Thes schools are all competitive admission and are diplomas you get in your twenties, and very few non-French get them. So, unlike in the US, for instance, entry/integration of non-French is far more blocked.

This latter point is what, in my view, really causes the sort of groupthink you end up with, given just how enforced the social code is at that socio-economic strata (how one talks, including one's accent, which necessarily needs to be "neutral," i.e. Parisian, generally how one dresses, et c. This is not something you see, say, in the US, where non-conformism is the norm in some of the most key industries like technology, or say in Germany, where a guy who started on the shop floor at Audi can end up COO if she is talented, and once COO, will still keep her Bavarian accent or whatever, and will be unashamed of the vernacular she has always spoke ). A brilliant analyst from, say, Canada's best school, arguably McGill, is not going to go far in a thpical corporate environment in France, if but for no other reason than that she is not likely to be hired in the first place.

And that is simply not the case in a typical corporate environment in the US, whatever the other faults that system has.

Leaving aside all the other naked assertions that seemed to be figment of prejudice more than anything else, let's see the most immediately testable one:

"Thes schools are all competitive admission and are diplomas you get in your twenties, and very few non-French get them."

Well, Polytechnique takes 20% of its students abroad, for the general admission curriculum (a much higher proportion in the Masters, which are diplomas that you can get at a later age too). And that is for the one school that is still part of the military -OK, very few will stay, but the French students are officers while in the school and need to be fit for service if they are to enter.

Ponts et Chaussées take in as many without a competitive entrance in year 2 as it does through the competitive entrance in year 1, for the general curriculum.

Of course, those are just my alma matters. I don't pretend to make sweeping generalisations about the ones I don't know as well.

As for diploma worship, you introduced this concept, not I. I too find it rather silly when someone's school is mentioned even though the person is, say, 60.
However, groups of Polytechnique students or graduates have displayed a far higher average intelligence than pretty much any other group I've come across (OK, those from Normale Supérieure, though more specialised, were quite the match). When I went to London School of Economics, I was baffled by how much less intellectually stimulating the whole environment was. Yes, France should aim to give a high level of training to a broader group, but to merely dub it "imaginary meritocracy" is either in spite or denial.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

However, groups of Polytechnique students or graduates have displayed a far higher average intelligence than pretty much any other group I've come across (OK, those from Normale Supérieure, though more specialised, were quite the match). When I went to London School of Economics, I was baffled by how much less intellectually stimulating the whole environment was.

Perhaps you can tell me what the class breakdown is of entrants to Polytechnique? How many from the popular classes? Are they anywhere near equal representation? And since the answer is no, does this mean you think intelligence has a class basis?

As with some of Jérôme's comments, you simply help me prove my point, though I'd add that the cheekiness of in the same breath calling me prejudiced is somewhat amusing.

"Perhaps you can tell me what the class breakdown is of entrants to Polytechnique?"

It regrettably has gone worse of late (although I don't think the word class is helping, I'll go along this time), in part as the public shooling sector has suffered, as cities have become more expensive and so on. This is something to address -though it should be addressed BEFORE. There is nothing in the school selection favouring the rich, the favouring has happened before they apply.

"How many from the popular classes? Are they anywhere near equal representation?"

No, they are not, though they are far from non-existent, and helping them was the main reason for having free institutions and even, in the case of Polytechnique, one that pays its students.

"And since the answer is no, does this mean you think intelligence has a class basis?"

This so blatantly does not follow that you have just proven yourself incapable of judging the quality of complex modelling that you claimed in an earlier post.
Since only Yohann Gourcuff in the past 10 years of the French football team failed to have a popular upbringing, do you claim that a richer background gives you a lesser body?

If you had a selection of the brightest 1 per 500 of the middle class only, you'd end up with an incredibly intelligent group, and you'd struggle to match that unless you had a similar exercise with a broader base. Now tell me where you've seen a similar exercise on the popular classes.
Then you might care to reflect that you deliberately added a class issue to that where there was none to start with: you claimed that there was a worship of institutions. Yet when employers want bright recruits, they will seek pools where they are concentrated. You pretended it was purely an illusion, yet they are indeed more concentrated. That's the point, yet you pretend to make this statement a class war. Silly. And highly prejudiced indeed.

Now, even though that was not the point at all, if you want an answer to that, well, it's not a matter of belief, it's established that the correlation of IQ is far from nil between parents and children (even adoptive children, though it is less). So, already, if IQ helps get a higher income (it still does, though of course is no guarantee), you do get a statistical difference and yes, richer class have on average a slightly higher IQ -admittedly not the only side of intelligence.

Then, at age 18, certainly the difference is greater. A poor upbringing will sometimes mean lower quality food, certainly less exposure to intellectually stimulating environments, if problems in school occur it's less likely that the child will have got qualified help...

So yes, different "classes" at the moment end up with statistically different intelligence. That is something to fight, not to deny.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

This so blatantly does not follow that you have just proven yourself incapable of judging the quality of complex modelling that you claimed in an earlier post.

.

Perhaps you'd like to diagram out the fallacy I've made...but be careful, one of the supporting statements I made came earlier, and to which you had already objected, i.e., that all of this amounts to an imaginary meritocracy. And note, I posed as a question, not as a logical statement (e.g., testable), that to which you object. Perhaps you are not given training in rhetoric at Polytechnique?

I could point out that my observation on who gets in to this place you so revere also holds for sex, and very most likely for race too (France has a silly way of ignoring this latter even though it increasingly matters, indeed my children were shocked at the casual racism they encounteed when they arrived in French public schools).

This would seem perhaps an appropriate observation, since most of the rest of your response would seem to have been composed with Herrnstein and Murray's infamous Bell Curve in mind.

IQ measures a set of teachable skills, (some of) which are class markers in our society. As with all teachable skills there is a degree of innate aptitude involved, but for most of the people who score very highly on such tests raw talent is the least of it.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.